Minds + Machines comments on the Vertical Integration Working Group Report

[Antony Van Couvering <avc@xxxxxxxxxxxxxxxxxxxx>]

As a member of the Vertical Integration Working Group, I'd like to extend my 
thanks to the co-chairs of the group, Mikey O'Connor and Roberto Gaetano.   
Their selflessness, strong character, and generosity of time and spirit have 
made this difficult working achieve as much as it could.

PROBLEMS

The Working Group has achieved nothing even close to consensus.  It is 
astonishing how resistant it is to coalescence.  In particular, it has suffered 
from these afflictions:

1. Most of the people who know the problems in detail, both from a policy and a 
business standpoint, are self-interested, and the stakes are high.  There has 
been a great deal of obfuscation, posturing, and carefully phrased half-truths 
and omissions in our dialog.

2. The people who are "looking out for the Internet" are far less knowledgeable 
about the the operational impact of various suggestions are consequently 
fearful of "bad things" that have little empirical foundation.

3. Just about everyone is having a hard time understanding what the new gTLD 
landscape will look like and their suggestions tend to suppose that most new 
gTLDs are going to be new mini-.coms.  In fact, most indications are that while 
we don't know what the new landscape will look like, it certainly won't be a 
bunch of .com clones.   So many of the approaches taken by the group are 
probably not that relevant to the future. 

4. The group as a whole seems entirely comfortable with proceeding on a 
non-empirical basis.  Potential harms and fears are thrown out without 
reference to their likelihood, their likely effect, or their monetary or social 
impact.  In this environment, anyone's concern is as good as anyone else's, 
because it is belief-based.   The little outside knowledge that has been 
brought to the table (e.g., advice of competition experts) has been rejected or 
belittled when it doesn't suit the commercial objectives of one camp or 
another.   We are working in an environment of competing belief systems. 

5. There are known camps or groupings of like-minded participants.  In the 
general absence of knowledge, if one camp wants one thing, others reject it 
automatically simply because it comes from a rival camp.  This has made any 
progress extremely difficult.


SUGGESTIONS

In this environment of sophistry, mistrust, and ignorance, I believe it is 
going to be up to the Board to cut the Gordian knot and make a decision.  I 
therefore provide the rest of my comment as advice to the Board. 

1. The solution needs to be justifiable in a common sense way.  A solution that 
is broad and can be fairly and quickly applied to all cases if far preferable 
to a solution that requires constant references to complicated rules. 

2. The solution should not try to be Solomonic by trying to cut the baby in 
half.  The rules need to keep things strictly separate, or very open.  Anything 
in between simply privileges those parties with more sophisticated lawyers who 
can find ways to adhere to the letter of the rules while violating its spirit, 
while throwing up roadblocks in the way new and relatively unsophisticated 
entrants.  I think it is fair to say that with all the new entrants into ICANN 
who haven't had years of experience with the ins and outs of policy, the more 
"clever" and "sophisticated" the solution, the more it will harm new entrants. 

3. The solution needs to be based on principles, not on trying to please 
everyone, or one party in particular.  Principle-based regimes are 
long-lasting,  clear, and easy to explain and defend to all parties.  That is 
what is sorely needed in this case.

4. The solution needs to be based on evidence and logic.  Because these rules 
will apply to a future that is cloudy to most, the Board should resist looking 
into crystal balls or believing any particular scenario advanced by lobbyists.  
 

5. In reference to #4 above, the Board should look at the full spectrum of 
evidence available to it by not restricting itself to the very limited fact set 
provided by the experience of gTLDs, but look also to ccTLDs, where a wide 
variety of business models have been tried -- many of them on a global basis.  
It should look not only at what harms (or lack of them) have resulted from 
vertical integration or the lack thereof, but also how consumers have 
responded.   

6. Consider that VI/CO restrictions are important not just for VI/CO, but for 
the character of the regulatory regime in general.  Again, the experience of 
the ccTLDs and their customers are apposite.  Is a regime restrictive or not, 
and how have customers responded. 

7. Finally, the Board needs to be very very very (did I say very?) careful of 
undue lobbying and influence.   It should be noted that two Board members are 
on the payroll of one of the major players in this discussion -- in fact, it is 
noted frequently by all and sundry.  Not only the substance, but the appearance 
of impropriety needs to be very strictly watched.   Whatever decision the Board 
makes, it will make some people unhappy, and may be challenged.   Doing things 
formally, in a documented, unimpeachable manner will spare the Board and ICANN 
embarrassment in the future.   The decision needs to be seen as fair, 
impartial, principled, and in the best interests of the Internet.  A decision 
that simply makes the oily wheel stop squeaking for a while may only be a 
short-term fix for a symptom of a much greater underlying illness. 


MINDS + MACHINES POSITION

Inevitably, we believe, the CO/VI issue must be resolved in favor of greater 
openness.   This is the general trend in successful economies and societies, 
and eventually we will get to a place where anyone can compete with anyone 
absent some showing of abuse of market power.   It makes sense to us that ICANN 
should be in front of that curve, rather than behind it.    If the Board finds, 
however, that the midnight fears and shudderings of powerful people, dictate 
that it cannot lead but only follow, then we recommend that the Board keep the 
very strict separation proposed in Nairobi, then modified in DAG4.   The 
DAG4/Nairobi strict separation model has several advantages:  it is easy to 
understand, based on clear principles, and it would show the Board to have been 
serious in Nairobi when it said that this was the way it would go if the 
community could not agree on a different way.    Furthermore, it is a position 
that can be changed in any direction, so that as the landscape becomes clearer, 
the Board can move judiciously and seriously in the right direction quite 
easily. If on the contrary the Board chooses to proceed now by half measures, 
it will be extremely difficult and awkward to backtrack. 

Again, we thank the co-chairs for their tremendous job, and we thank ICANN for 
allowing us to comment and participate. 

Antony Van Couvering
CEO, Minds + Machines